This chapter looks at the revolution that technological advances in communication technologies has created for electronic. It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes.
E-business connections:
Back Office - Internal processes such as distribution, manufacturing, and accounting
Front Office - External processes such as a link between the company and its suppliers.
Modes of Processing Business Events:
Periodic - processing mode in which a delay exists between the various data processing stages.
Batch - the aggregation of several business events over a period of time with the subsequent processing of these data as a group by the information system.
Immediate - processing mode in which little or no delay occurs between any two data processing steps.
Methods for capturing e-business events:
Automated Manual Systems (4 steps)
1. Business event occurs - recorded on source document.
2. Record business event data - by batch processing.
3. Update master data - periodic mode - master data no longer updated upon next business events.
4. Generate outputs - usally in the forms of weekly and monthly reports.
Online Transaction Entry (OLTE) - record business events at the place of occurence to reduce redundancies in periodic mode processing, e.g. UPS uses handheld computers to record delivery and signature of customers at source.
Online Real-Time (OLRT) (3 steps)
1. Business event occurence and recording of event data - data are entered into the system directly. Source documents are almost never used.
2. Update Master data - each event is processed individually and updated instanteously.
3. Generate reports and support queries - real time tracking data can be searched using online queries. Periodic reports are also generated.
Online Transaction Processing (OLTP) - real time system that performs all/parts of processing activities at data entry terminal locations. Common applications are ATMs, airline's CRSs, and E-pass (a kind of RFID) in toll roads.
Methods for conducting E-Business:
E-mail - non standardized message - a weak form for e-Business.
Electronic Document Management - Capturing, storage, mangament, and control of electronic document images for management decision making and facilitating business event data processing. For example, instead of filling in paper forms, user fill up e-forms, say, in PDF formats, and transmit and store those forms by electronic means. An application example is in tax return submission.
Electronic Data Interchange (EDI) - Computer to computer exchange of business data. The format has to be well defined by the organizations involved. Dedicated private network between two organizations are usally required for security, and maintaining an agreed level of service. Typical applications are in hospital supply systems, and online payment systems between business vendors and banks.
EDI - operates by providing a collection of standard message formats and dictionary in a "simple" way to exchange data via any electronic messaging service.
Internet Commerce - consists of mainly two types : B2C, B2B. B2C has a shop front on internet, as constrast to the phyical locations of "Brick & Mortar" stores. B2C can sell both e-products (i-Tunes) or physical products (Amazon) to consumers. B2C companies usually have sophisticated CRM and CSS systems. The fufillment of physical products and the level of seamless integration within the ERP system present a great challenge to B2C companies. B2B companies tried, but so far not very successful, to replace EDI by a concept of e-marketplace where B2B companies act as exchange to connect participating business orgaizations. Nevertheless, the concept of e-marketplace / e-community gained much wider acceptance in some B2C companies such as eBay and Myspace.com.
XML - enables business application sharing, direct transaction processing and futher connectivity with various other business and e-commerce applications. XML represents a metalanguage which enables a concern to define, customize and transmit business tranaction information via the internet.
EDI and XML - many believe they complementary. In a comprehensive information technology strategy which includes e-commerce, companies need to offer their partners the opportunity to conduct e-commerce with them in any manner that is considered established, secure and cost effective.
Miscellaneous (but important) Concepts:
Assurance providers (who, why, how) - Internet secuirty is the most critical concern in e-Commerce. As a result, Internet assurance services is provided for a fee to vendors in order to provide limited assurance to users of the vendor's site that the site is relaible and event data security is reasonable. For example, WebTrust certification is given to vendors when the website meet the standards in security, avaiability, processing integrity, online privacy and confidentiality. Customers can check the WebTrust seal of the vendor site about its validity and authenticity by another verification company called VeriSign. VeriSign Inc (NASDAQ: VRSN) operates intelligent infrastructure services that enable and protect billions of interactions every day across the world’s voice and data networks.
Value Added Network Service:- Instead of direct connections between each trading partner in an EDI, an organization can connect to a value-added neck (VAN) service. A VAN service acts as the EDI postman. Thus the VAN will become the hub which relays the incoming and outgoing messages among participating organizations. Contemporary value-added network providers now focus on offering EDI translation, encryption, secure e-mail, management reporting, and other extra services for their customers.
E-Business
This chapter looks at the revolution that technological advances in communication technologies has created for electronic. It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes.E-business connections:
Modes of Processing Business Events:
Methods for capturing e-business events:
- Automated Manual Systems (4 steps)
1. Business event occurs - recorded on source document.2. Record business event data - by batch processing.
3. Update master data - periodic mode - master data no longer updated upon next business events.
4. Generate outputs - usally in the forms of weekly and monthly reports.
- Online Transaction Entry (OLTE) - record business events at the place of occurence to reduce redundancies in periodic mode processing, e.g. UPS uses handheld computers to record delivery and signature of customers at source.
- Online Real-Time (OLRT) (3 steps)
1. Business event occurence and recording of event data - data are entered into the system directly. Source documents are almost never used.2. Update Master data - each event is processed individually and updated instanteously.
3. Generate reports and support queries - real time tracking data can be searched using online queries. Periodic reports are also generated.
Methods for conducting E-Business:
Miscellaneous (but important) Concepts: